Park South’s big, big break

Our opinion: Why should taxpayers have to pick up the slack for a huge tax break for Albany Med’s and its partners’ residential-commercial venture in Park South?

Albany Medical Center’s redevelopment of Park South is the kind of commitment the city needs — a potentially transformative project that could revitalize a run-down area and substantially increase the tax base. We appreciate the effort, and the risk.
But in demanding a 70 percent tax break over 22 years, you have to ask: Is Albany Med serious?

Yes, Albany needs development. Over the years, it has actually had quite a bit. But much of it has been by entities like Albany Med and the state of New York — projects that bring temporary construction jobs and shiny new buildings, but not much in the way of new revenue for a city government that’s expected to provide all the services these buildings and their occupants require, such as police and fire protection and drivable streets.

At some point, Albany needs to expect more from developers than the pleasure of their company. At some point, developers need to pay their fair share, just like any other private citizen or commercial enterprise. There’s no time like the present.

Albany Med’s partner in the venture, Park South Partners LLC, an offshoot of Tri City Rentals, has asked the Albany Industrial Development Agency for a $26.5 million tax break for 268 apartments , spread over 22 years. The developer says it needs the break to offset anticipated losses in the first seven years.

Albany Med is also looking for a tax break on a medical office building, a deal that could cost the city upward of $3.2 million over 12 years.

And on top of all this would come almost $2.4 million in sales and mortgage recording tax breaks.

No doubt the IDA will hear about the magic of multipliers — how the $110 million redevelopment of Park South will bring economic activity that will pay for any lost taxes many times over. That’s the argument, essentially, that New York state uses in refusing to come up with more money for its capital city, in which it holds billions of dollars worth of untaxed real estate.

Perhaps a coalition of homeowners should ask for 70 percent tax breaks on the premise that without them and all the economic activity they bring, Albany would be a ghost town.

Of course, that would be absurd. We may all bring some value, intrinsic or material, to our communities, but communities are based on the idea that mostly everyone pays their fair share, with a few exceptions, like houses of worship, educational and cultural institutions, and charities.

But residential and retail developments? Doctors’ offices? Since when did they become charity cases?

We’re not against tax breaks to help jump-start fledging efforts. Communities like Albany often use short-term tax incentives to help enterprises get through the early years of growing business or attracting tenants. Full taxes might be phased in over five or 10 years.

But decades? And at such a scale? That’s taking an arguably reasonable tax break and turning it into a long-term corporate subsidy. Or, from the perspective of all the other taxpayers who’d make up the slack, corporate welfare.

Thank you for raising perfectly legitimate questions about the continuing onslaught of requests for PILOTs in Albany. Your point about the remainder of the city’s taxpayers needing to pick up the slack for any of these projects that get tax abatements is spot on. Why should the average home owner subsidize the profit margin for medical office space or market rate apartments? If the developer can’t make the financials on a new building work, then they shouldn’t build the building. And the act of requesting a tax break that extends beyond the term of most commercial loans simply makes no sense. I find it hard to believe that a building will not cash flow after the debt service is paid off.
Albany’s current and prior administration have paid a lot of lip service to the need for expanding the tax base to counteract the effect of having so many tax exempt institutions headquartered within the city limits. Approval of PILOTs or tax abatements for the Park South proposals simply makes a bad tax picture even worse.